New Low Cost Airline Symposium

6 July 2004

The Centre for Asia Pacific Aviation yesterday opened the Indian Subcontinent and Gulf Region’s first Low Cost Airline Symposium, attracting over 300 aviation and government leaders. According to Managing Director, Peter Harbison, “India’s vast potential has remained largely unfulfilled. Vested interests, regressive regulation and excessive bureaucracy have in the past combined to suppress the natural development of the travel industry. This contrasts strongly with the liberalisation of several Gulf states and, for example, China, where in all cases air travel has grown exponentially”.

From the same base 20 years ago, China’s domestic air travel market has grown by nearly 1000%, but India’s has not even doubled.

“This promise of so much - unconditional - private risk capital invested by potential new entrants is simply too great an opportunity to be ignored. It offers a remarkable possibility to stimulate economic activity all across the Indian Subcontinent - yet with minimal risk or cost to government”, said Mr Harbison.

Most of the passenger travel on these airlines will be incremental, so the threat to the existing airlines is limited. Indeed, the market openings for the incumbents will be far beyond what has existed in the past. India currently has one of the lowest rates of air travel per capita of any emerging country. China for example, has three times the propensity to travel by air as India.

According to Mr Harbison, “the great value of aviation and tourism, frequently overlooked by economists, obsessed with traditional infrastructure and industrial production norms, is twofold:

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? By using underutilised resources (such as regional airports and accommodation), they can generate immediate benefits, with minimal incremental cost; and

? Benefits of travel and tourism are immediate. They flow directly into the local economy; for example, taxi drivers, bus companies, local shopowners, local - often unskilled - workers, all receive immediate income as new travellers pass through.

“In short, the low cost airline revolution, with its accompanying liberalisation, has`become an irresistible force. No longer can anyone seriously believe ‘It can’t happen here!’ It not only can happen - but it is happening. It is a unique win-win-win scenario”, said Mr Harbison. ——-